Citi raises forecast for Vietnam’s 2025 GDP growth

Citi raises forecast for Vietnam’s 2025 GDP growth

Citi remains cautiously optimistic on Vietnam's growth outlook, although US tariffs on Vietnam will increase post a recently agreed trade deal.

According to Citi analysts, the prospects for continued deepening of onshore supply chains remain high, with uncertainties on global trade policy and possible export payback in the first three quarters of 2025 (3Q).

Stricter enforcement of rules of origin certification could accentuate the export payback in the near term, and details on how transshipment will be redefined remains unclear.

In April, the Vietnamese government issued a directive to strengthen the inspection and supervision of the origin of goods.

Citi assumes that a scenario where tighter inspection post-deal leads to export delays cannot be totally ruled out, and this in turn could accentuate an expected reversal or payback of export growth in 3Q, following the frontloading of shipments to the US in the first half of this year.

More broadly, Citi economists keep in mind that effective tariffs have just been raised thus could finally translate to higher selling prices and dampened demand from US consumers.

For example, Citi analysts indicated back in April that some textile suppliers producing in ASEAN would cover only a third of the reciprocal tariff, while the rest would be split between the brand owner and consumer.

In June, export growth fell slightly to 16 per cent on-year, from 17 per cent in May.

Longer term, Citi assumes Vietnam’s tariff advantage remains, retaining the incentive to deepen local supply chains.

The steady-state for the global tariff landscape is still unclear, pending outcomes of US negotiations with various other economies.

As such, Citi has raised its forecast for Vietnam’s 2025 GDP growth to 7 per cent from the previous 6.6 per cent.

Raising GDP forecasts now seems counterintuitive to the backdrop of US tariffs on Vietnam having been just raised by 10pps.

Vietnam’s GDP growth in the first half of 2025 reaching 7.52 per cent, however, exceeding Citi Vietnam’s expectations and is higher versus the 7 growth seen in the first quarter of this year.

Although the acceleration, propelled largely by manufacturing with a 0.5pps addition, incorporated the effect of US frontloading, Citi highlights that the growth acceleration was also supported by domestically oriented sectors.

Minh Ngo, Vietnam Markets head and country treasurer

According to Minh Ngo, Vietnam Markets head and country treasurer, Citi’s priority is to connect global clients to local markets and local clients with global opportunities to support the growth of Vietnam.

Citi Vietnam is at the forefront of delivering world-class solutions in FX hedging, rates and commodities derivatives, liquidity management, and structured funding solutions for the bank’s corporate, commercial, public sector, and investor clients.

“Our extensive global network and international presence provide clients with a significant competitive advantage, empowering them to navigate an evolving market landscape and optimise their operations and supply chains in response to dynamic external market conditions,” she said.

VIR